In the world of startups, there's a fine line between envisioning the future and lying to the world
The desire to meet expectations can also lead to doubling down on lies and even adding more in the form of “stretch goals” — further escalations of promises to mask the original deceit.
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A deluge of high-profile frauds in recent years has tainted entrepreneurship. There was Theranos, the medtech startup with a groundbreaking new blood test that sounded, and was, too good to be true. Or Sam Bankman-Fried, the darling of the cryptocurrency exchange, FTX, and the future of banking for many — until he was convicted of fraud and conspiracy to commit money laundering. And then there was the Fyre Festival, the luxury Bahamian answer to Coachella that ended in a fight for survival and a flood of tears.
You could be forgiven for thinking that entrepreneurship attracts narcissists, liars, con artists and pathological risk takers.
Yet a recent paper by IESE Business School’s Yuliya Snihur and Llewellyn D.W. Thomas, with Raghu Garud and Nelson Phillips, suggests that spinning yarns is a process that can happen even to those with the best intentions.
Their paper also highlights that entrepreneurial deception isn’t a solo act. Stakeholders, including investors, business partners and employees, frequently play a role in maintaining the myth. Equally, they have a role in breaking it.
[This article has been reproduced with permission from IESE Business School. www.iese.edu/ Views expressed are personal.]